We paid 326K for our house and put down 100K, We now owe 285K including our 1st mortgage and HELOC. We were told by our realtor that our house would bring 285K - 300K so my husband put in for a job transfer/promotion and got it, only to find out 2 weeks later that our realtor did not do there homework and our house is only worth around 220K. I would just like to know if anyone out there, since alot of you seem to have crystal balls about the future, would care to lend me there wisdom on exactly what we should do. OH and my husband has allready accepted the position and he works for the gov. and can't retract his transfer. We did everything right and have A++++ credit and are being told by realtors to short sale.
Connie

Well, as one of "those" that bought in 2004, I'll go ahead and label myself as a victim, never missing a payment, my home is now not worth what I paid. I did plan on staying in it 7 or so years, so, I have to wait it out, but now my property taxes are unfairly assesed on a home that's not worth the original pricing. YES, I've asked to be reassesed months ago...I've not heard back as I'm sure they are inundated with the same requests.....ugh. Stinks all around.

I have to say some of you have a very 'narrow' view of those people caught in this burst bubble. I bought in 2006 after coming here from overseas, I had no idea what the market was doing or going to do. As a foreigner I took the only mortgage offered to me from a reputable bank. And now I have a house worth $100K less than my mortgage and stuck paying rent (interest only mortgage). I can only hope that values somehow increase before my fixed period is up.

Just remember some of us are innocent victims.

Wow, dg, sounds like you managed to follow the immortal advice of Warren Buffett, "Buy low, sell high," to a T! Nice work.

San Mateo Homesellers in Trouble (heretofore SMHT), that's very well said, "renters are penalized in a silent way." SMHT, I am wondering if you agree with this article: www.businessweek.com/ap/financ...

MikeW and Scott, you are 100% RIGHT about the professionals like real estate agents and investors - they *had* to know this was an artificially inflated market, as you said. Ah, I'm still sad for the foreclosed homeowners, tho.

Really appreciate hearing from SurveyKid! I did not know that negative equity is the biggest predictor of foreclosure. Thanks for sharing the info and the link to Buy and Bail. But SurveyKid, the percentage of foreclosed homes is so scary high *now.* You think it will get worse? How much worse?

Buy and Bail, from today's WSJ.

http://online.wsj.com/article/...

The greatest predictor of foreclosure is not loss of job(s). It's negative equity. The banking industry has known this for a long time. The data is very clear.

People will walk. Smart, educated people who can do the math will walk away from negative equity because they won't buy the moral invectives against doing so. It's simply a huge financial mistake to keep paying on your mortgage if you bought at the top and are seriously underwater. People can hurl all the invectives they want at those who walk.

They will walk.

The foreclosure wave is only just beginning.

I don't have much sympathy for people who chose to buy during an inflated market and are now underwater. They could have simply compared the costs & risks of renting versus owning. I also have no sympathy for people who bought Wall Street investments with the expectation that they'd rise in value (duh!) but have seen them fall dramatically. That's a risk that comes with investing, especially those of a speculative nature. Accept your mistake; something is only worth what someone is willing to pay for it.

Janis,

The problem with the real estate market keeping the economy afloat is that is was based on an unsustainable bubble. Too many people entered the real estate industry in some form or another because of the artificially inflated market. Too many people flocked to easy money.

I am not happy to see people losing their jobs, but that is inevitable. Hopefully these people saved money when they were profiting off the unsustainable bubble market. How could these folks not know what was coming?

Actually, at least in the Bay Area, many renters still can't afford to buy because prices are still way out of line. At the same time, renters' tax dollars are going to huge bailouts of homebuilders and people who were foreclosed on. Remember that renters never get a tax deduction on rent, so whatever shortfall in taxes collected now are due to the tax relief homeowners and flippers are experiencing. So I would say that renters are penalized in a silent way and very few people seem to care at all. All you hear about are sob stories of people who got foreclosed on, and I have very little sympathy for most of them.

Hi Janis,

I "flipped" back to back primary residences in 2003-2005 and then 2005-2007. And now I am back to renting. Even though my intentions may not have been to flip these at the time of purchase, that's what I ended up doing and therefore fit one definition of a flipper.

While there is no technical definition of a flipper, an investor or an owner-occupier who plans to sell a house within a reasonably short period of time should fall into that category IMO.

And for the record, I feel sorry for very few, if any, in this ordeal.

MikeW, I agree with you that falling prices will eventually be a good thing (and may already be a good thing) for people around here who want to buy houses. But in other ways it's brutal, affecting so many areas of the economy, including the job market as the ripples spread.

What was keeping us afloat economically in the Bay Area for some time was the hot real estate market, employing many, many people, from construction workers to appraisers to mortgage brokers to real estate agents. And now many of them are losing their jobs, which in turn affects us all as they stop purchasing goods, taking vacations and so on.

San Mateo Homesellers, you're got a point, for sure. Perhaps I should have phrased it differently. But why do you think renters were penalized? Don't you think those folks are now rewarded because more and more of them can finally afford to buy, plus their credit is unscathed by, say, a foreclosure?

Greg, interesting point! I never thought of it that way. I think of flippers as real estate professionals or others who already own a home and who buy a second home with no intent of occupying it and every intention of selling it in a year at least. Do you agree with my definition?

If these people didn't plan to stay in their houses for 5-7 years minimum, that puts them in the "investors who planned to flip for a quick buck" in my book. Sometimes you don't have control over things like a sudden job transfer, but house prices are no more guaranteed to go up than the stock market, and anyone expecting such a condition needs to learn some basic market concepts, so to say these people are somehow being "penalized" just shifts the blame from the responsible party - the people who made the decision to buy in the first place.

I find it silly to say that these homebuyers were "penalized" in any way. In fact, our government is doing all types of things to "help" these people. For example, taxes on loan forgiveness is now waived. Additionally, they want to give more tax credits to home buyers and home builders: http://www.wisebread.com/more-...

The people that were really penalized were the patient and responsible renters who see their tax dollars go to giving tax cuts for these people who didn't look at the big picture and see how little sense it made to buy a house.

I find it very difficult to feel bad for people who bought in 2005. The writing was clearly on the wall, and anyone buying at that time should have anticipated prices would retreat and should not have purchased unless they expected to be in the house for at least seven years.

Price decreases are the best thing that can happen to the area as a whole, as prices were obviously out of sync with affordability. This short term pain is necessary to the correction and a good thing.